Investing doesn’t have to be complicated. It’s why, at Vanguard, we think everyone has it in them to become a successful investor.
We won’t pretend that markets only go up or guarantee that you’ll make a certain return or avoid a loss. And we won’t bamboozle you with jargon.
But when you open an individual savings account (ISA) or any other type of account with us, we will try to get you to think about the reasons why you are investing. We will also try to get you to think about the different ways you can spread and balance your risks and keep more of your return, and to consider how best to respond if markets turn against you.
This is the essence of our four investment principles – goals, balance, costs and discipline – which are backed by decades of research and build on our legacy as pioneers of sensible low-cost investing.
Thinking about these things will give you the framework of a personal investment strategy.
Why invest with funds and why Vanguard funds
The next step is to put this strategy into effect with funds.
Why funds rather than individual shares or bonds? Because your risks are better spread; with a fund, your money is invested not in one or two different companies (and/or governments, in the case of bonds) but, in many cases, in hundreds, if not thousands.
Investing in the Vanguard FTSE Global All Cap Index Fund, for example, means investing in more than 7,000 different companies1. Our Global Bond Index Fund, meanwhile, gives you access to more than 13,000 separate bond holdings2. Some of our multi-asset funds contain even more.
Why Vanguard funds? Because we’ve built our reputation on being a pioneer of low-cost investing and our funds aim to provide investors with everything they need.
Our funds are designed and constructed to give investors the best chance of long-term investment success. Many also have a habit of standing out from the crowd for their staying power, as two broad routes: either build your own portfolio with several of our funds or cut to the chase with a ready-made portfolio that already brings together many of our different funds.
The reason we frame the task this way is because research3 shows that an investor’s mix of shares and bonds – what’s known as their ‘asset allocation’ – is a key driver of long-term investment success. Thinking about the balance of your investments, and their different risk and return characteristics (shares are historically more volatile than bonds), also encourages you to consider where exactly you are on your investment journey, how far away you are from your goals, and about the other assets you might own.
It encourages a more holistic approach that ensures your chosen investment strategy fits your particular needs.
Our building-block funds come in different shapes and sizes: they may have a regional focus or be global; they may contain only shares or bonds; they may be actively run by managers seeking to beat the market or track an index and therefore offer the market return; or they may seek to align your investments with your ESG4 preferences.
The choice is yours.
There’s a further factor to consider – some of our funds are exchange-traded funds (ETFs) and some are not. It’s something you’ll notice with your Vanguard account whenever you want to invest your money, because the first question you’ll be asked is how quickly you want your fund purchase to go through.
With our ETFs you can trade in real-time with a ‘live’ market price on the London Stock Exchange, in the same way you might with individual shares. This gives you certainty about the price you buy your funds at but involves a £7.50 dealing fee. To avoid this, you can choose to trade at the ‘next available price’. This executes your order at the next trade point, which is usually twice a day for ETFs but can take two to three business days for all our other, mutual funds.
In contrast, our ready-made global portfolios bring together different index funds to provide low-cost, balanced solutions that align with people’s different goals and risk appetites.
They are funds of funds that seek to maintain a fixed ratio of bonds and shares, as with our LifeStrategy range, or to adjust this ratio over time as you move closer to retirement and beyond, as in the case of our Target Retirement Funds.
And they are designed as potential one-fund solutions for all your investment needs.
Do it all for me?
We believe our funds cut through the fog of personal investing with simple, high quality and low-cost solutions.
However, we recognise that not everyone is the same and that some people might prefer a little more guidance. This is where our Managed ISA service can help.
We’ll help create an ISA investment plan for you – one that aligns with your attitudes to risk and aims to grow your wealth. We’ll manage it for you too.
And as you would expect from Vanguard, it’s low cost at just 0.6% a year in total.
Whatever your preferences, our low-cost product offering aims to provide you with everything you’ll ever need to be a successful investor.
1 7,163 Stocks as of 28 February 2023.
2 13,542 as of 28 February 2023.
3 Gary P. Brinson, L. Randolph Hood, and Gilbert L. Beebower, 1995. "Determinants of portfolio performance." Financial Analysts Journal 51(1):133–8. (Feature Articles, 1985–1994.)
4 ESG stands for environmental, social and governance. More on Vanguard’s approach to ESG investing.
Investment risk information
The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.
The eligibility to invest in either ISA or Junior ISA depends on individual circumstances and all tax rules may change in future.
For further information on risks please see the “Risk Factors” section of the prospectus on our website at https://global.vanguard.com.
For further information on the funds’ investment policies and risks, please refer to the prospectus of the UCITS and to the KIID before making any final investment decisions. The KIID for these funds are available, alongside the prospectuses, via Vanguard’s website https://www.vanguardinvestor.co.uk.
If you have any questions related to your investment decision or the suitability or appropriateness for you of the products described in this article, please contact your financial adviser.
This article is designed for use by, and is directed only at, persons resident in the UK. The information contained in this article is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this article is general in nature and does not constitute legal, tax, or investment advice. Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding, or disposing of shares and/or units of, and the receipt of distribution from any investment.
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